Stripe, a financial infrastructure platform for businesses, has launched Stripe Financial Connections, “enabling businesses to establish direct connections with their customers’ bank accounts that power a wide range of financial processes.” The new service aligns with the Open Banking or Open Finance movement that enables connectivity between dispersed financial services.
Businesses are able to use Financial Connections to verify accounts “for payments and payouts, check balances to reduce payment failures, and cut fraud by confirming bank account ownership.”
As noted in the update, direct bank account connections “have historically been nearly impossible to establish on a programmatic basis.”
The announcement also mentioned that businesses have “had to either build custom integrations with the thousands of different financial institutions where US customers maintain bank accounts, or attempt a workaround, like asking customers to type in routing and account numbers, and then confirm microdeposits a few days later.”
The latter is “a tedious process that 40% of customers abandon along the way.”
Financial Connections provides “an easier solution: customers simply enter their online banking credentials and select the account they’d like to link.”
It supports platforms, businesses, and “a full spectrum of users, from NFT creators to churches.”
Jeremy Ricketts, product manager at Planning Center, a software platform for churches, stated:
“As in-person worship returns, we’re doing everything we can to help our churches sustain themselves and the communities they serve. Stripe Financial Connections lets us quickly and easily verify bank accounts for donations. This is good for the churches we support, who can more easily accept donations, and good for their members, who can quickly link their bank accounts.”
Bank account connections facilitate “a host of multisided benefits.”
For businesses, linked bank accounts streamline direct debit payments, “which boosts conversion.”
For platforms, Financial Connections allows them “to use linked bank account information to underwrite risk and offer loans to their business users.”
And for all parties, Financial Connections—and the bank account connections it facilitates—”opens the door to a suite of financial services.”
Businesses, for example, can “offer their customers tools for tracking budgets, paying bills, and identifying spending patterns.”
Nifty Gateway, a marketplace for NFTs, uses Financial Connections with Stripe Connect “to onboard and pay out to thousands of creators.”
Patrick McLaren, chief operating officer of Nifty Gateway, stated:
“With Stripe Financial Connections, creators can link their bank accounts in seconds when they join Nifty Gateway. No account number typos, no delayed payouts, it just works.”
As explained in a blog post, financial Connections is “designed around transparency, security, and customer privacy.”
In order to get started with Financial Connections, businesses have “to specify the type of information they will request from customers, and why they need it.”
The update further noted that the linking process itself “provides customers with visibility into the information they share.”
Then, once a link is established, Stripe “encrypts a customer’s bank account information and saves businesses the risk of managing sensitive credentials on their own.”
Clara Liang, business lead at Stripe, said:
“Businesses have been asking us for an easy, secure way to connect to and verify their customers’ bank accounts. Stripe Financial Connections delivers just that.”
Businesses that use Financial Connections can “integrate bank account information with other Stripe financial products like Connect, Stripe Capital, Stripe Identity, Stripe Issuing, and Stripe Treasury.”
The coordinated use of these products “has powerful results.”
Platforms using Financial Connections and Connect “reduce payout failures by 75%, and the combination of Financial Connections and Capital allows Stripe to provide users with 55% larger loan offers.”
Stripe Financial Connections “is available to businesses in the US. For more information, visit stripe.com/financial-connections.”